Hundreds of people submitted a petition to the government against the payout bill

Iceland’s president has refused to sign a bill that would compensate the British and the Dutch governments over the failure of Icesave bank, calling a national referendum on the issue instead.

Olafur Ragnar Grimsson said on Tuesday he had decided “to refer this new act to the people,” adding that the public must “determine the future course”.

“The involvement of the whole nation in the final decision is therefore the prerequisite for a successful solution, reconciliation and recovery,” he said.

The Icesave bill calls for the payout of $5.4bn to Britain and the Netherlands after its respective governments compensated more than 320,000 customers who lost money in the collapse of the internet savings bank.

‘Domestic distate’

The Dutch government said it was “extremely disappointed” at the decision and called for an explanation.

“The Netherlands maintains that Iceland is compelled to pay back the money,” Ruud Slotboom, a Dutch finance ministry spokesman, told the AFP news agency.

“We expect of the government of Iceland to give us an explanation in the short term of the situation now created and the steps to be taken.”

The compensation bill has sparked anger in Iceland, which was hit by a financial meltdown in October 2008.

About 60,000 people – about one-quarter of the country’s electorate – have signed a petition protesting against the bill and calling for the issue to be put to a referendum.

Al Jazeera’s Jonah Hull, reporting from London, said “the domestic distate for this bill stems from the feeling among many Icelanders that they don’t want as taxpayers to be paying for the sins of their banks.

“They feel that their country is in no position .. to pay for the £5bn to Britain and the Netherlands.”

A handicapped woman is seen begging for money in Berlin, Germany, in this August 11, 2009 file photo, amid rising unemployment rates in Europe due to the global financial crisis.

The European Commission has expressed alarm over the eurozone’s mounting debt crisis, seeing it as a threat to efforts aimed at pulling the zone out of its first recession.

European officials borrowed heavily in the face of growing economic shortfall and the commission predicts that the average eurozone public debt could reach 84 percent of gross domestic product by 2010.

The body warns that the debt levels, figures far above a ceiling set by European Union’s Stability and Growth Pact, will make public finances unsustainable in half of the 16 countries that share the single European currency.

It also noted that higher public debt levels, which show an average 18 percent increase from 2007, are born out of soaring budget deficits, low growth and banking sector support.

Eurozone states poured billions of euros on fiscal-stimulus measures and bank bailouts to weather the financial downturn. As a result, some of the zone’s most strong economies are facing high public debt levels.

Europe’s largest economy, Germany, forecasts public debt at around 78 percent of GDP this year, while Greece is bracing for a shortfall of 120 percent.

In France, the second largest economy in the zone, public debt jumped to a record 75.8 percent in the third quarter of 2009.

Protesters gathered outside the president's residence to submit their petition

Iceland’s president is facing pressure to halt the repayment of $5bn to British and Dutch savers who lost their money when the island’s banks collapsed over a year ago.

Nearly a quarter of Icelandic voters have signed a petition asking Olaf Ragnar Grimsson to veto a bill sanctioning the repayment and organise a referendum on the issue, organisers said on Saturday.

Hundreds of people, some carrying flares, gathered outside Grimsson’s residence to submit the petition.

Parliament earlier narrowly approved an amended version of the bill to reimburse Britain and the Netherlands for the amount lost by their savers who had deposited funds in high-interest “Icesave” online savings accounts.

But the Grimsson has yet to sign it into law and 23 per cent of the island nation’s electorate – 56,089 people – have signed the petition, organisers said.

‘Huge risk’

The Icesave deal is deeply unpopular with the Icelandic population and there is widespread feeling that taxpayers are being left to foot the bill for mistakes made by financial firms operating under the watch of other national regulators.

InDefence, the group responsible for gathering the signatures, said the Icesave legislation represented a “huge risk” for Iceland’s economic future.

“All projections based on realistic assumptions … showed without doubt that Iceland would be unable to meet the payments stipulated by the Icesave loan agreements as set out in the disputed legislation,” a statement from the group said.

But repaying the money could also hold some benefit for Iceland as the longstanding dispute has held up payment of some aid funds from international lenders.

‘Debt burden’

Morton Kraemer, a credit analyst with rating agency Standard & Poor’s, said that while the bill “will add significantly to the general government’s debt burden” the resulting aid payments would help Reykjavij relax financial controls put in place during the financial crisis.

“It [passage of the bill] is a decisive step to unlock further disbursements of up to 2.3 billion euros from the International Monetary Fund and from bilateral loans from Nordic governments,” he said.

Passing the Icesave legislation would also boost Iceland’s hopes of swift entry into the European Union, a move Iceland’s population is only lukewarm about.

Icesave was an online subsidiary of Iceland’s Landsbanki bank, which had to be rescued in October 2008 as the global credit crunch hit.

Stocks fell as soon as markets opened in Dubai on Monday

Nakheel, Dubai’s property developer and part of the heavily-indebted Dubai World conglomerate, has asked Nasdaq, a US stock exchange, to stop trading its bonds.

The bonds have been taken off the Dubai bourse, Nasdaq said on their website.

Markets in Dubai, part of the United Arab Emirates (UAE), had fallen 7.3 per cent by the end of trading on Monday after the Eid al-Adah holidays.

Some major securities, including the construction and banking shares, fell to almost the 10 per cent maximum allowed.

Dubai World, the emirate’s investment arm, announced on Wednesday that it would seek a six-month freeze on debt repayments of almost $60 billion, prompting concerns about its economic health.

‘Worrying signs’

Al Jazeera’s Dan Nolan, reporting from Dubai, said: “It has been a bad day here. The main bourse dropped 5.6 per cent instantly.

“Analysts said before they opened that anything more than a three per cent drop would be a disaster.”But others are pleased that it is not the full 10 per cent drop, which was certainly possible.

“Selling orders are far outnumbering buying orders and that is of great concern.

“It is certainly worrying signs at the stock market.

“There are concerns that there will be another large decrease on the stock market tomorrow. But hopes are that it will increase next week.”

Abu Dhabi hit

Shares in the Abu Dhabi Securities Exchange, another of the UAE’s seven emirates, dropped by 7.4 per cent early on Monday, due to Dubai’s debt crisis.

Abu Dhabi, the oil-rich capital of the UAE, said on Sunday that would shore up Dubai’s finances on a case-by-case basis, while the UAE said that it would offer emergency support to the region’s banks.

Abu Dhabi has already provided $15 billion in assistance to Dubai this year.

Nakheel said that it wanted to halt trading in its three Islamic bonds, or sukuk, until it can provide the market with a complete picture of its restructuring plans.

The bonds are worth $5.25 billion.

Asian markets rose on Monday between 1.7 and 2.7 per cent on average, with bank and construction shares, big losers last week, leading the turnaround.

Global stock markets had taken a nosedive last Friday, triggered by news of Dubai’s request for a debt repayment freeze.

However, Monday’s tentative recovery came as investors’ nerves steadied on hopes that the fallout from a potential default will be limited.

Francis Lun, general manager of Fullbright Securities in Hong Kong, told Al Jazeera: “A lot of Chinese companies are major contractors in the Middle East.

“Now that a crisis has hit Dubai World, I think that many of these construction companies will have to wind up their operations in the Middle East. So it will be a big hit for them.”

Reported By: Al Jazeera

Ron Paul

If the Obama administration keeps its promise in guaranteeing not to raise taxes to pay for universal health care, the only way to cover the costs will be for the Federal Reserve to print even more money out of thin air, a process that will kill the dollar and lead to lower living standards for all Americans, warns Congressman Ron Paul.  In his weekly Texas Straight Talk telephone update, Dr. Paul said that Saturday night’s passage of the health care bill in Congress will lead to a further devastation of the American economy and the greenback.  The Congressman highlights the fact that the health care reform package is already twice as expensive as originally forecast and that estimates of past health care spending programs have been off by as much as 100 per cent, “So there is no telling what the actual cost will be,” states Paul, adding that government intervention has always been expensive and historically has routinely led to waste, fraud and abuse.  Paul labeled the bill “completely unconstitutional” and accused Washington of “torturing the numbers” rather than facing the truth and warned, “If health care reform does indeed pass, we should not be under the illusion that it will be free, they will have to get the money from somewhere.”

Dismissing claims that the government will get the money from cutting wage fraud and abuse, noting that this was intrinsic to government programs, Paul said that if the administration doesn’t raise taxes and premiums, “This can only then put more pressure on the Fed to print the money out of thin air,” resulting in an even greater acceleration in the weakening of the dollar.

“This new monumental pressure could very well be the straw that will break the dollar’s back,” warns Paul.

“Foreign creditors are already nervous about continuing to invest in the U.S. because of our skyrocketing debt – the explosion of debt that is certain to accompany the enactment of this national health care bill can only add to that nervousness,” said the Congressman.

Paul concluded by warning that a government takeover of health care will take a flawed system and make it “immeasurably worse”.

Listen to Dr. Paul’s comments via the You Tube clip below.

Reported By: Info Wars

Most economists predict that the rate will in fact begin to fall next year

For all the pain caused by the Great Recession, the job market still was not in as bad shape as it had been during the depths of the early 1980s recession — until now.

With the release of the jobs report on Friday, the broadest measure of unemployment and underemployment tracked by the Labor Department has reached its highest level in decades. If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.

In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous recorded high was 17.1 percent, in December 1982.

This includes the officially unemployed, who have looked for work in the last four weeks. It also includes discouraged workers, who have looked in the past year, as well as millions of part-time workers who want to be working full time.

The official jobless rate — 10.2 percent in October, up from 9.8 percent in September — remains lower than the early 1980s peak of 10.8 percent.

The broader rate is highest today, sometimes 20 percent, in states that had big housing bubbles, like California and Arizona, or that have large manufacturing sectors, like Michigan, Ohio, Oregon, Rhode Island and South Carolina.

The new benchmark is a sign of just how much damage financial crises tend to inflict. A recent book by Carmen M. Reinhart and Kenneth S. Rogoff, two economists, found that over the last century the typical crisis had caused the jobless rate in the country where it occurred to rise for almost five years. By that standard, the jobless rate here would continue rising for two more years, through the end of 2011.

Most economists predict that the rate will in fact begin to fall next year, largely because of the federal government’s aggressive response — fiscal stimulus, interest-rate cuts and a variety of creative steps by the Federal Reserve and Treasury Department. Friday’s report showed that monthly job losses continued to slow recently, though the improvement has been gradual.

At the White House Friday, President Obama signed a bill to extend unemployment benefits and a tax credit for home buyers, and said that he was looking at ways to enact more stimulus. On Wednesday, the Fed announced that it expected to leave its benchmark interest at zero for “an extended period.”

Nearly 16 million people are now unemployed and more than seven million jobs have been lost since late 2007.

Officially, the Labor Department’s broad measure of unemployment goes back only to 1994. But early this year, with the help of economists at the department, The New York Times created a version that estimates it going back to 1970. If such a measure were available for the Depression, it probably would have exceeded 30 percent.

Compared with the early 1980s, a smaller share of workers today are officially unemployed and a smaller share are considered discouraged workers.

But there are many more people who would like to be working full time and have been able to find only part-time work, according to the government’s monthly survey of workers. The rapid increase in their ranks and in the officially unemployed has caused the rate to rise much faster in this recession than in the early 1980s. Two years ago, it was only 8.2 percent.

One of the more striking aspects of the Great Recession is that most of its impact has fallen on a relatively narrow group of workers. This is evident primarily in two ways.

First, the number of people who have experienced any unemployment is surprisingly low, given the severity of the recession. The pace of layoffs has increased, but the peak layoff rate this year was the same as it was during the 2001 recession, which was a fairly mild downturn. The main reason that the unemployment rate has soared is the hiring rate has plummeted.

So fewer workers than might be expected have lost their jobs. But those without work are paying a steep price, because finding a new job is extremely difficult.

Second, wages have continued to rise for most people who still have jobs. The average hourly wage for rank-and-file workers, who make up about four-fifths of the work force, actually accelerated in October, according to the new report.

Even though some companies have cut the pay of workers, the average hourly wage has still risen 1.5 to 2.5 percent over the last year, depending on which government survey is examined. Average weekly pay has risen less — zero to 1 percent — because hours have been cut. But average prices have fallen. Altogether, the typical worker has received a 1 to 2 percent inflation-adjusted raise over the last year.

In the other two severe recessions in recent decades, workers with jobs fared considerably worse. At the same point in the mid-1970s downturn, real weekly pay had fallen 7 percent; in the early 1980s recession, it had fallen 4 percent.

It is a strange combination: workers who still have a job are doing better than in other deep recessions, but the unemployment and underemployment have risen to their highest level since the Depression.

Reported By: The New York Times

"Dollar will be utterly Destroyed"

The dollar will get “utterly destroyed” and become “virtually worthless”, said Damon Vickers, chief investment officer of Nine Points Capital Partners. Due to the huge wage disparities between the United States and emerging markets like China, Vickers said that may resolve itself in some type of a global currency crisis.

“If the global currency crisis unfolds, then inevitably you get an alignment of a global world government. A new global currency and a new world order, so we may be moving towards that,” he said.